Astron Paper & Board Mills IPO opens to raise Rs 70 crore
Astron is intending to aggressively penetrate in the domestic markets and expand their domestic market presence by expanding their sales and distribution network, said Kotak Securities.
Subscription for Astron Paper & Board Mills Limited has been made available, as the Gujarat-based company launched its initial public offering (IPO) on Friday.
The company wants to raise nearly Rs 70 crore from the primary market to increase capacity and repay a portion of its debt.
At 1347 hours, Astron has received bids of 29,71,360 equity shares, subscribing by 21% from the total offered 1,40,00,000 equity shares, as per the NSE data.
Price band for this IPO has been fixed at lower end of Rs 45 per share and upper end of Rs 50 per share.
Investors can subscribe for this IPO till December 20, 2017.
10% of the total issue has been allotted to qualified institutional buyers (QIB), while 55% has been kept for non-institutional investors (NII) and remaining 35% for retail individual investors (RII).
Under this IPO, Astron is also providing Rs 2.5 per share discount to eligible employees. The floor price is 4.5 times the face value and the cap price is 5 times of the face value.
Proceeds of this IPO is expected to be utilised for setting up an additional facility of lower GSM kraft paper. Part of the proceed will also be used for repayment of unsecured loan, funding the working capital requirement and general corporate purposes.
From this issue, the promoters' holding in Astron will reduce to 46% from previous 66%.
Only one company, Pantomath Capital Advisors Private Limited, is acting as the book running lead manager of the Astron's issue.
Astron can be compared with listed peers like Shree Ajit Pulp and Paper Ltd., Genus Paper & Boards Ltd., and South India Paper Mills Ltd., whose P/Es stand at 16.18x and 44x and 14.49x respectively.
In comparison with peers, Astron's valuation is fairly priced.
According to Dalal Street Investment Journal, the recent hike in the prices of Kraft paper posed threat to the corrugated box manufacturers. Also, the company’s issue size is small so getting allotment might not be easy.
Hence, in Dalal Street's view the investment is risky so investors can avoid this IPO.
Kotak Securities, however, stated that Astron is intending to aggressively penetrate in the domestic markets and expand their domestic market presence by expanding their sales and distribution network.
It added, “In line with the increasing sale of products through online retail, the potential for the packaging industry may increase and thereby the demand for Kraft paper for manufacturing corrugated boxes may also increase.”
Astron is one of the major Kraft paper manufacturers in Halvad, Gujarat with manufacturing facility having an installed annual capacity of 96,000 mt tonnes.
Between FY14 and FY17, Astron's revenue grew from Rs 106.19 crore to Rs 184.58 crore witnessing a compounded annual growth rate (CAGR) of 14.52%.
During the same period, Astron's operating profit (EBITDA) has risen from Rs 11.33 crore to Rs 23.01 crore having CAGR of 17.95%. While turnaround net profit stood at Rs 9.59 crore by end of FY17 compared to loss of Rs 3.02 during FY14.
Astron's revenue, EBITDA and PAT for the six months ended September 2017 was Rs 110.96 crore, Rs 14.62 crore and Rs 9.45 crore, respectively, with an EBITDA margin of 13.18% and PAT margin of 8.52%.